Dollar Hits New Low as Markets Await US Inflation Data
The US dollar has continued to trend lower for the second consecutive week, hitting a new low in almost three weeks on Wednesday. The dollar reversed direction and entered a downtrend since the US-backed intervention to support the weakening yen and bond buybacks in late July.
The bears regained control after a limited correction was capped by the 38.2% Fibonacci retracement of the 101.48 to 99.45 decline, reinforced by the 100-day moving average (DMA) and a bull-trap pattern formed on the daily chart.
Market participants are now awaiting the release of the US August inflation report on Friday, which will contribute significantly to the Federal Reserve's decision on next week's policy meeting.
If the inflation numbers come in higher than expected, it could lead to a rate hike and benefit the dollar. However, more work would be required at the upside to neutralize bears.